Author: Shane Touhey, Commercial Analyst, Electron
The Network Code on Demand Response is in the works in the European Union (EU) to enable demand response energy resources to participate in wholesale electricity markets across EU states. To support this upcoming regulatory framework, the European Union Agency for the Cooperation of Energy Regulators (ACER) lays out a compelling blueprint for how to accelerate the uptake of demand-side flexibility in its 2025 report: Unlocking Flexibility: No-Regret Actions to Remove Barriers to Demand Response.
While the report is tailored for the EU, it holds insights for utilities in the United States.
ACER’s report highlights actions like empowering independent aggregators, removing administrative burdens for small players, and creating transparent, time-based price signals to drive behaviour.
The focus is on ensuring that flexibility from distributed energy resources (DERs) is not just available but integrated at scale.
Aggregators are the missing link
One of the report’s most powerful messages is the need to give aggregators a clear pathway into energy markets. In Europe, ACER urges member states to strip away barriers that prevent aggregators from operating independently, including rules that tie them to utilities or require unnecessary permissions.
In the US, progress on this front is uneven. FERC Order 2222 was a watershed moment, mandating that DERs be allowed to participate in wholesale markets. But its implementation has been slow. Clear national guidelines could help the US follow Europe’s lead in making aggregation a competitive, scalable part of grid services.
Price signals matter
The report also highlights how price signals are crucial for incentivising consumers to change their consumption patterns – and those incentives can come from time-of-use (ToU) tariffs as well as market mechanisms.
As we’ve covered in other blogs, relying on tariffs alone can lead to consumer herding. Pairing time-based charges with targeted flexibility markets can help solve local congestion issues more efficiently.
Here, too, the US has room to grow. While some states like California and New York have made strides with tariffs and demand response programs, many consumers across the country still face flat rates regardless of system stress.
Designing the right markets alongside network tariffs that reflect real-system conditions could amplify the impact of demand response and make local flexibility more viable.
Market design is the key to unlocking scale
Tools like smart thermostats, EV chargers, and home batteries are already capable of providing flexibility services. The opportunity now lies in refining the markets they operate in, making sure participation is straightforward, pricing is transparent, and benefits flow to consumers.
Europe – including the UK – is tackling this through simplifying qualification processes, standardising flexibility products, and cross-border market alignment. In the US, where ISOs, utilities, and state regulators all play a role, the landscape can be complex.
But that complexity also offers a strength: a wealth of regional experimentation and innovation. With better coordination and clearer national standards, the US can build a more cohesive environment for flexibility to scale.
Flexibility as infrastructure
The US is already leveraging demand response effectively in many regions, particularly during peak events and emergencies. But there’s a broader opportunity to take it to the next level, by embedding flexibility from DERs more deeply into day-to-day market operations.
Europe’s approach treats flexibility as a long-term infrastructure solution, not just a contingency tool. With the right market signals, data-sharing frameworks, and policy alignment, the US can do the same, scaling demand-side resources in a way that enhances reliability, lowers system costs, and accelerates decarbonisation.
